-LRB- Financial Times -RRB- -- When Macau unveiled record gambling revenues on Tuesday , the government was silent about the source of much of the cash fuelling the territory 's boom : illegal money transfers from mainland China .

From pawn shops offering money withdrawal services , to underground banks using human mules to transport cash across the border , Macau tolerates the illicit methods that mainland punters use to bring money into the former Portuguese colony , which reverted to Chinese control in 1999 .

Mainland tourists , who have made Macau the world 's largest gambling centre , can legally bring only Rmb20 ,000 -LRB- $ 3,175 -RRB- when crossing into the Chinese territory . But many gamblers bring more cash to the casino tables by using their Unionpay debit card to withdraw money -- for a fee .

`` There is no risk . We pretend to sell the customer an expensive watch or a piece of jewellery , charge the amount in renminbi to the debit card , and then give him the equivalent amount in Macau patacas or Hong Kong dollars as if the customer had decided to return the object for an immediate cash refund , '' says the manager of a pawnshop up the street from the Grand Lisboa casino , Macau 's oldest casino owned by Stanley Ho , the gambling tycoon .

The manager says the cardholder 's records will register the transaction as a purchase . Unionpay , which was formed by China 's big banks , says it bans such transactions , but the company declined to comment on the fact that the practice remained widespread . The company said it no longer released data on how much cardholders spent in Macau .

People familiar with the industry say the Macau government can not afford to shut down the illegal services , which hundreds of pawn shops advertise publicly on neon signs .

`` The Macau government 's hands are tied , '' says one veteran Macau policeman . `` It is not going to initiate a crackdown , because over 75 per cent of its revenue comes from gaming taxes . ''

About 16m mainland Chinese visited Macau in 2011 , an increase of more than 20 per cent on the previous year , and 60 per cent more than the 10m who visited in 2006 . Analysts estimate that up to 30 per cent of Macau 's gaming revenue could be channelled through illegal channels .

`` Banking restrictions make it very difficult to transfer funds to Macau legitimately , but it is easy for people to find ways -LSB- around the rules -RSB- , '' says a senior Chinese bank manager who gambles in Macau .

While the debit card cashback service is the most visible source of money for the less well-heeled punters , those with deeper pockets have found different ways to avoid the restrictions .

VIP punters -- whom analysts estimate generate 70 per cent of Macau 's gaming revenues -- gamble on credit provided by so-called junket operators who seek out wealthy mainland gamblers .

The junket operators receive commissions from the casinos or get a share of the profits . They , or their agents , sometimes use underground banks to return the money they have collected as debt on the mainland to Macau . The lenders use criminal gangs from Fujian and Guangdong provinces who in turn pay human mules as little as $ 5 -- compared with Guangdong 's average daily wage of $ 7 -- to smuggle cash across the border .

While the underground banks are part of what is known as the shadow banking system in China , providing credit to cash-strapped companies , their Macau-related business is limited to transferring money from other sources .

One former junket operator and a Hong Kong owner of a mainland factory in Guangdong province , just across the border from Macau , described how operators also use Hong Kong business people who own companies on the mainland to transfer money illegally .

He said operators handed over renminbi debts collected on the mainland to the factory owner , who used the money to pay his staff wages . Then , the owner sent the equivalent in Hong Kong dollars from his Hong Kong bank account to the operator 's account in Macau . Both sides profited by agreeing a mutually beneficial exchange rate .

There is no public data available to indicate exactly how much of Macau 's gaming revenue comes from illegal channels , and casino operators and government officials refuse to speak about the issue . Macau 's Gaming Inspection and Co-ordination Bureau refused to comment .

`` Neither the Macau government nor Beijing wishes to damage the Macau economy . There 's good reason to keep the scale of illegal transactions a closely guarded secret so nobody needs to take action , '' says the police officer .

While Beijing does not condone gambling on the mainland , it has so far not cracked down on the illegal transfers . Analysts say it is unlikely to take action as the Chinese Communist party does not want to destabilise Macau just 13 years after the city returned to Chinese rule .

`` Beijing is unlikely to take measures such as tightening visa restrictions or clamping down on debit card cashback services , as long as Macau is seen as a safe and enjoyable place to visit and casino operators refrain from activities or comments that might portray the city in a bad light , '' says Grant Govertsen , the Macau-based managing partner at Union Gaming Research , a US research group .

© The Financial Times Limited 2012

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Macau tolerates illicit methods to bring money into the former Portuguese colony

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Underground banks using human mules to transport cash across the border

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Macau had record gambling revenues from 16M mainland visitors last year